Ashley Stewart’s retail reinvention

By advocating for women in need of a champion, what was once a struggling clothing company has transformed into something much bigger.

When James Rhee stepped onto the stage at Kings Theatre in Brooklyn on Sept. 16, 2017, it was to the strains of the theme from Rocky. On the surface, the theme song might seem like an unusual anthem for a then-46-year-old private equity manager turned CEO, but Rhee specializes in upending expectations.

Since August 2013, Rhee has been the chairman and CEO of the clothing company Ashley Stewart, a position he admits to being wholly unqualified for initially. He’d never had a line job in any company since busing tables on Long Island, let alone a retail fashion company for plus-sized women – but he believed in Ashley Stewart and everything it stood for. And this was a business that desperately needed an injection of faith.

A brilliant start, and a steep decline

Ashley Stewart was founded in 1991 by Joe Sitt, a real estate developer who had been having difficulty securing tenants in urban centers – and who realized many of the women living in those same inner-city neighborhoods weren’t finding what they needed either.

There were no fashionable apparel stores catering to plus-sized black women looking for a boutique-like shopping experience. With a name borrowed from American classics Laura Ashley and Martha Stewart, Sitt’s first shop struck a chord: it ultimately spawned 350 more locations in 100 cities across the United States.

But over the decades, and after being sold to a succession of private equity firms, the brand faltered. The 2008 recession exacerbated issues caused by too strong a focus on expansion and too little time spent on essentials such as strong management, technology, digital commerce and mathematically driven decision making.

In 2010, Ashley Stewart declared bankruptcy, the result of years of operating losses and unchecked employee and ownership turnover.

The company was losing up to $8 million a year and no one seemed to know how to stem its decline. Enter Rhee.

“By the age of 42, I'd learned a lot about investing and ventures in growth and distress, I was good with money and math,” he says. “But I was also the father of three kids and someone whose first inclination after graduating from Harvard was to teach high school for $12,600 a year. I love people. And I love helping people – people who don't necessarily ‘see’ themselves – win.”

In many ways, the brand reminded Rhee of his mother, a Korean immigrant with a tenuous grasp of English. He had noticed that she wasn’t always at ease in the U.S., but would relax when at the Korean grocery store speaking a language she understood. For Rhee, Ashley Stewart was that kind of shop: a place where one could congregate with like-minded people, be respected, and regain strength.

“It was for the woman who may not have many moments for herself, the woman who takes care of a lot of people,” says Rhee. “I felt like this was one of the few places that took care of her. And I thought it represented what was best in all of us.”

He promptly resigned from the company’s board, on which he’d been sitting since 2011, to become CEO. He gave himself half a year to prevent what was an imminent liquidation of Ashley Stewart, hoping that a strategic buyer would emerge to preserve as many stores as possible.

Turning work into passion

One of the first orders of business was a town hall at which Rhee outlined his vision for Ashley Stewart 2.0. They would keep things simple. No waste – whether financial, mental or emotional. They would be curious. They would build a meritocracy. Rhee encouraged his new colleagues to be decisive, to be professional, to act like owners. Everyone, he said, was accountable to everybody else. He wanted them to have fun and to win. To get there, they would focus on math (homing in on the right, realistic numbers), transparent communication, lean processes and, above all, kindness.

“After James spoke at that town hall, this went from being a job for me to a passion,” says Lori Harmon, Senior Director, IT Operations and Human Resources. “Up until then, I had been one of those people who came in, kept my head down, did my thing. I had no emotional connection to the brand. From that day on, it became like a movement.”

For the next six months, Rhee worked side by side with almost every person in the organization, says Harmon. If Ashley Stewart was a confidante, a friend who could lift your spirits and boost your confidence, Rhee needed to be that person for his team. So he travelled the country and met with store managers, associates and customers and asked for their feedback: What could be improved upon?

The answer: just about everything. The company’s converted warehouse was infested with roaches. The stores had no computers. Corporate had no Wi-Fi, no bandwidth. To say that staffers were disillusioned was a colossal understatement. “It was like playing for a team that never won – the employees were losing constantly,” says Rhee. “At some point, they were just there trying to get a paycheck.”

Rhee began by tearing down walls at headquarters to create an open, non-hierarchical space – a literal embodiment of the new transparency he believed would help save the company. (Even after the subsequent move to a different space, Rhee still doesn’t have an office – he sits at a desk in the middle of the action.)

Then came the closure of half of the remaining 180-odd stores, most of which were based in malls and unprofitable for years. The website was overhauled, the distribution outsourced, the servers virtualized. The production cycle was sped up and the company began basing its goods flow on an examination of its customers’ tendencies. Every step along the way, employees and customers were kept in the loop and made aware of changes via email, social media and SMS.

The changes were necessary but exhausting, with dividends that weren’t immediate. In the fall of 2013, Rhee was out in the warehouse looking at scrap metal to sell to make payroll.

But despite the extreme financial strain, he wasn’t prepared to give up on the kindness portion of his vision. That December, Ashley Stewart threw a party and clothing giveaway for the Brooklyn YWCA. In addition, 40 stores across the country were each allotted $250 to donate to their favourite local charity. “We were penniless and I didn’t think there would be a post-Christmas for the company,” says Rhee, “but we needed to stay true to our core values.”

In the New Year, Rhee sat down with staffers to go over next steps: Ashley Stewart would be declaring bankruptcy for the second time in less than four years. “I was nervous because I was loving what I was working on,” says Harmon. “But I was confident because James had a plan.”

He did, one that allowed the company to rise from its proverbial ashes again in April 2014. After addressing basic mathematical and technological issues, the company focused on further divesting itself of its old-school bricks-and-mortar image. By concentrating on social media and e-commerce, the company finally stopped hemorrhaging money, and in 2015 declared approximately $20 million in profits. The stores were equipped with tablets and computers.

“The people that transformed this company were from the inside,” says Rhee. “Together, somehow, a skeleton crew pulled this off. We rewrote everything: the math, the culture, everything.”

True company values

Back at Kings Theatre, hundreds of women have gathered for the Finding Ashley Stewart 2017 Finale, the culmination of a months-long, country-wide search for “a diva who effortlessly personifies Ashley Stewart.” The grand-prize winner receives an Ashley Stewart makeover and wardrobe, an Ashley Stewart photoshoot, a segment on Ashley TV (the company’s YouTube channel) and gifts from sponsors. The initiative is part of the company’s ambitious social-media engagement and a testament to its new reach: the response from the crowd is rock-show-worthy. Rhee praises the women in attendance, singling out some from that 2013 meet-up at the YWCA, sitting in the front rows. Over the course of his seven-minute speech, he is charismatic, relatable and yes, kind.

For a quarter century, Ashley Stewart has been dressing women for work, for church, and for social events. Today, the company has given its employees and customers a professional environment in which they are empowered, a place to call theirs, and a family. And those women have given back to Rhee, cheering him onstage and off. The story of Ashley Stewart really is the story of transcendent values. It’s about friendship and loyalty. It’s about smart investing – in people.

How Ceridian has helped transform our business

By Lori Harmon
Senior Director, IT Operations and Human Resources

We signed on with Dayforce in October 2016; we went live with scheduling, time and attendance, and payroll and benefits. Before the changeover, we had been working exclusively with paper. For example, employees punched in at the point of sale and we gathered the hours weekly then fed them into ADP PayForce for payroll. It was a very manual process.

We considered moving forward with ADP or Ultimate, but Dayforce – which is extremely intuitive – was superior to both. A single database for all modules makes for more efficient processing, for one. Another advantage is that our field managers have real-time data on which they can base proactive decisions. By streamlining hiring, scheduling, punching in and out, and the maintenance of personal data, our field organization can further focus on their business.

Working with Ceridian allowed us to implement a paperless benefits enrollment process in one week. This meant our associates could clearly see the benefits they had available, and that enabled them to make much better decisions regarding their options. Having a paperless system was also crucial when it came to performance reviews: for the first time ever, we were able to actually push the process down to the sales associate level.

One important change for our hourly field associates: thanks to Dayforce, we can now offer them pay cards. Many of those employees don’t have bank accounts and were handing over up to 20% of their pay to get their checks cashed. This new system enables them to be paid, dollar for dollar, what they earned. Today, all stores have an inventory of pay cards that can be loaded so associates can get their funds that day if necessary; this is especially useful if there is a shipping delay with the cheques.

What’s next

Now that our team is comfortable with the basics, we will begin layering in the modules that are likely to have the most impact. The Recruiting module will allow for automated I-9 and background screening, as well as automated LinkedIn and career-page postings.

The onboarding software will give our new hires a consistent experience and ease compliance when it comes to capturing required new-hire information – from Equal Employment Opportunity Commission forms to details regarding the person’s address, contacts and banking. Before Dayforce, that was all on paper and extremely difficult to track and maintain.